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Microsoft acquires Two Hat, a moderation company that helps keep Xbox clean

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The deal will help Microsoft’s consumer services push

microsoft logo stock Photo by Sam Byford / The Verge

Microsoft has acquired Two Hat, a content moderation provider that’s helped keep harmful content off Xbox. Founded nearly 10 years ago by a former Disney Interactive security specialist, Two Hat uses AI to classify and filter billions of human interactions across messages, images, usernames, videos, and more. Microsoft has been working with Two Hat for the past few years to improve its Xbox communities, but the terms of the deal were not disclosed.

“For the past few years, Microsoft and Two Hat have worked together to implement proactive moderation technology into gaming and non-gaming experiences to detect and remove harmful content before it ever reaches members of our communities,” explains Dave McCarthy, head of Xbox product services. “Two Hat’s technology has helped to make global communities in Xbox, Minecraft and MSN safer for users.”

The acquisition is designed to improve Microsoft’s first-party content moderation in gaming, and even extend to the company’s consumer services. Microsoft has big plans for consumer services, after hiring a former Uber exec to lead a new consumer apps effort earlier this year.

Microsoft has been trying to acquire popular communities recently, including TikTok, Pinterest, and Discord. CEO Satya Nadella has expressed an interest in Microsoft focusing on creators and communities, and moderation plays a critical part in any online community-based service.

Microsoft’s Xbox network has text filters.
Image: Microsoft

Two Hat also has a number of its own customers, and Microsoft isn’t planning to stop supporting them. “This is a deep investment in assisting and serving Two Hat’s existing customers, prospective new customers and multiple product and service experiences here at Microsoft,” says McCarthy. “With this acquisition, we will help global online communities to be safer and inclusive for everyone to participate, positively contribute and thrive.”

Microsoft launched a number of text-based filters for its Xbox network three years ago, after Xbox chief Phil Spencer outlined a plan for fighting toxicity in gaming. Two Hat has been assisting with some of these Xbox moderation efforts, and Microsoft also has a much broader goal of being able to filter out Xbox Live party sessions in the future so live audio calls can be filtered with real-time bleeps similar to broadcast TV.